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Top 10 Reasons for System Implementation Failure

Insurance carriers are not typically custom development or system integration experts – their business is insurance, not software. There are some national carriers that have built their company around providing insurance directly over the web and have created proven methods of software development and integration. That is not the case for most, especially small- or mid-size carriers. These carriers see the need to improve products, speed to market, and flexibility. They address the underlying system needs by buying, building, or a combination, and introducing new systems into their technology ecosystem. Unfortunately, too many times these projects fail.

There are many different reasons why system implementations to fail, but this is the top 10 in my experience.

1) No experience running an RFP to begin their selection. The RFP was pulled from the internet, modified slightly and sent out. Out of 4 responses, three eventually dropped out, so they went with the one remaining, never taking a close look at what they were buying.

2) Inadequate Project / Program Management Process. The project was driven by hard completion dates without having a valid work breakdown structure for a project plan to really understand what it would take. One high level executive ran the project, and no one was empowered to reveal that the emperor had no clothes.

3) The software development company was located in Europe and the stateside representation was a consulting company that did not understand the carrier’s business.

4) The carrier failed to properly check the vendor’s references of successful installations, of which they would discover there were none.

5) The carrier wanted to perform too much of the work themselves, learning as they go, and not allowing the experts to do what they do best.

6) Tried a big bang (All lines, all states, and all systems on day one).

7) Scope management. Tried to put everything in the first release afraid that if it was not there, they would never get it. As a result, they got nothing.

8) The carrier’s requirements were actually pretty good, but they did not know how to manage them. They could not set and hold on to their agenda, rather than letting the vendor set the agenda.

9) Not enough involvement in the process by the business. After the selection all the work was done in a “black box” and what was delivered was not what the business wanted.

3 thoughts on “Top 10 Reasons for System Implementation Failure”

You have correctly identified what they didn’t do. Underlying this are the skills they don’t have.
Nearly every fault above boils down to inexperience.
Nothing wrong with European software developers – just have to know how to manage them.

Nothing wrong with aiming high – but need to set realistic expectations based on experience and due diligence.